Is a making a Bitcoin investment in 2018, as wise a choice as would have been in 2008?
According to New York Stock Exchange pundits like Tim Draper, the current Bitcoin value is still on track to reach $250,000 within the next 3-4 years. This being the case, a $5,000 Bitcoin investment today, could see savvy investors net over $100K+ in profit.
There is, of course, just one problem. Namely, that in recent days, ‘Will Cryptocurrency Crash’ has become one of the hottest trending topics on Google. As it is though, while everyone is busy watching cryptocurrency prices, what people should arguably be watching are long-term fiat cash and U.S. national debt forecasts.
The Financial World as You Know it is Ending
On 22nd of May 2018, the United States Congress passed a bill to completely repeal the 2008 Dodd-Frank Act.
Put in place to deter irresponsible lending practices by big banks, the Dodd-Frank Act was instrumental in bringing stability back to the post-2008 financial markets.
For the most part, this was due to the fact that as well as curbs on reckless issuance of credit, any financial institution holding over $50 billion in financial assets, was automatically subject to annual financial stress tests. In this way, banks and financial institutions could prove their ability to weather a subsequent 2008-like financial crisis independently.
Sadly, with the repeal of the Dodd-Frank Act, annual financial stress tests and curbs on reckless lending are now a thing of the past. What is more, repealing the Dodd-Frank Act couldn’t have come at a lesser opportune time for regular Americans.
In short, the United States Congress has just repealed the Dodd-Frank Act at a time when it is (arguably) needed most to protect everyday consumers.
How Would the Current Bitcoin Value Fare in a 2008-like Crisis?
Cryptocurrency like Bitcoin is often compared to digital gold for good reason.
In the event of a financial crisis caused by Big Short-like overzealous lending, hard assets not tied to the value of the U.S. Dollar hold value much better than stocks, bonds, and property prices. This is because unlike the U.S. Dollar, the current Bitcoin value is not backed by debt. In fact, Bitcoin was created in 2008 by Satoshi Nakamoto, specifically in response to the then financial crisis.
Bitcoin has Liquidity - Traditional Dollar & Precious Metal Investments Don’t
Needless to say, when it comes to hyperinflation and financial collapse proof assets, precious metal investors are typically very critical of cryptocurrency. To many, Bitcoin is simply air money. However, in the event of a 2008-like financial crisis, the average Bitcoin value could easily eclipse the value of gold completely.
Will There be an Economic Collapse & if so When?
For anyone familiar with the 2015 movie ‘The Big Short,’ it will be clear what the recent repealing of the 2008 Dodd-Frank Act potentially opens the door to.
Of course, the good news (kind of) is that any financial collapse on a par with that which took place in 2008, likely won’t happen until banks have had an opportunity to benefit from their new Dodd-Frank freedoms. The only question is, will you have a Bitcoin investment or two put aside ready for when the markets do finally get put out to pasture?